Protectionism against Outsourcing

If protectionism is met with protectionism, guess who would lose most?

From a broad overview, one can make a correlation between the implementation of protectionist policies and a negative impact on economic globalization. Furthermore, one can even go as far as to conclude that protectionism against outsourcing would undoubtedly hinder economic cooperation with India.

It is already hard to spot an Indian company selling goods and services in the Western world, (whilst the converse is not true). This coupled with protectionist policies against outsourcing would inevitably lead Indian politicians to ask, “Why should India open it’s domestic market to the West? What does India get out of the deal?”

Hence, in a war of economic protectionism and trade barrier retaliation, who has the most to gain and lose from greater economic cooperation and globalization? The answer to this is undoubtedly the US in particular and the Western world in general. US and European businesses dominate virtually any given industry; the same does not hold true for Indian firms. As a result of this Western corporate dominance, globalization and greater economic cooperation simply gives US giants access to a much bigger market. Considering the financial muscle 350 million middle class Indians are now beginning to flex, this is the perfect time for more economic integration between the US and India. India is the new frontier for corporate America. It is thus why the US has the most to lose and gain from economic globalization. It would be negligent of US politicians to ignore the masses of revenue and job creation the powerful Indian market can bring the US.

The anti-outsourcing camp must learn to look at the bigger picture before petitioning for protectionist polices against outsourcing. If the West is discontent with outsourcing, then cannot India be discontent with the outsourcing of their consumer market? If the East looks West for job creation via outsourcing, is the West not increasingly looking East for job creation via demand from India’s consumer market?

Advocates of anti-outsourcing must acknowledge that outsourcing is a part and parcel of economic globalization and focus on the overall vast benefits globalization brings. Protectionism is inevitably met with protectionism, which will only stifle economic globalization. Not only would this not be in the interest of the US, but because US companies are the most competitive in the world, it is the US that would lose the most from economic isolation.